Unpaid taxes burden millions of Americans, causing mountains of stress.
Have you experienced any of the following?
- Your debit card is rejected at checkout (“insufficient funds”) because the IRS has drained your bank account.
- Your paycheck is less than you expected and less than you need. When you investigate, you find that the IRS has skimmed money from your wages directly through your employer.
- You receive notice that the IRS has seized control of your property, and it is no longer in your control.
- You’ve already spent your tax refund only to receive notice from the IRS that this money must be immediately returned or you will be fined.
- The IRS files charges against you for tax evasion and starts sending letters with difficult legal language and deadlines.
- You finally save enough money to pay your overdue taxes, only to discover that your tax bill has substantially grown since you last checked. You didn’t expect late penalties and fines to be so hefty.
The emotional and financial strain of owing the IRS can be crushing. The IRS has many paid employees with the authority to make your life difficult if you’ve either failed to file or pay your federal income taxes. In early 2018, the IRS was granted further power to follow-up with Americans who have not paid their taxes. The IRS now has the license to revoke the passports of Americans who owe more than $50,000 in taxes.
The State Department is actively working with the IRS to deny passport applications to Americans who owe taxes, as well as revoking the passports of Americans who are behind with the IRS. If you are overseas when this happens, you may be granted a temporary passport so that you can re-enter the US, but you won’t receive a regular, 10-year adult passport until you get right with the IRS.
You may think that the IRS is saber-rattling and wouldn’t actually have the bureaucratic organizational skills to deny or revoke passports. However, reports on bloombergtax.com state that the IRS flagged 400,000 taxpayers to the State Department in 2019 alone. By May of 2019, the IRS had sent almost 389,000 certification notices to taxpayers in danger of losing their passports. The certification notices explained that delinquent taxpayers living overseas had 90 days to clear their records with the IRS, or their passports would be revoked and invalidated. Domestic taxpayers are given 30 days to comply, rather than the 90 days afforded to international ex-pats.
The fact that the IRS could revoke your passport is especially important news for American ex-pats, many of whom need to provide their US passports to work, rent accommodations, buy property, or open bank accounts while overseas. It is estimated that 5 to 9 million Americans currently live overseas (sources and source). Some of these ex-pats are unaware that they must file their US taxes even if they are not making money in the US.
The following is a composite account created for illustrative purposes:
Meera was a US citizen with young children who moved with her family from California to Australia. After a couple of years of working in Australia, for a variety of reasons, Meera stopped filing US taxes.
At some point thereafter, Meera decided to make the trip back to California to visit her parents and reacquainted them with their grandchildren. Since children’s passports expire after 5 years, she applied to the embassy for new passports for her children, although she didn’t need a new passport for herself. She sent the children’s old passports along with their applications to the US embassy, only to be informed at a secondary appointment that her children’s passports would not be returned or renewed until she paid $80,000 in back taxes, fees, and penalties. In addition, Meera’s own passport was in danger of being revoked.
Meera was given 90 days to pay in full or the option of taking a one-way ticket back to the US on a travel document.
When it comes to owing money to the IRS, ignoring the problem or procrastinating will always make your situation worse. The IRS charges late fees amounting to 5% of your total taxes for each month you are delinquent (up to 25%). Fees and interest add up, making a late payment of weeks or months into a financial ordeal.
If you are behind in either filing or paying your federal taxes, the best advice we can offer is to either pay your taxes in full (if possible) or to get on a monthly installment payment plan as soon as possible. Each day you delay is equivalent to dumping dollars down the drain. The sooner you stop the losing flow, the better off you’ll be.
Establishing a monthly installment plan with the IRS is something you may want to discuss with a qualified tax professional. The IRS has deadlines and protocols which will be familiar to your tax debt lawyer – that’s his or her job. Many satisfied customers attest to the fact that working with a tax lawyer will lower the overall amount of money you spend fixing this problem, even including the lawyer fees. Tax lawyers stay in business by saving people enough money on their taxes to make up for the cost of their services.
To find out how a tax professional can help you, contact us at The Tax Defenders. We’ll schedule you for a free consultation and walk you through the tax resolution process.
We can help stop the fees and interest from piling up, help you register an installment payment plan with the IRS, help you access government aid programs for burdened taxpayers, and, ultimately, keep you from losing your passport.